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FIFTY-FIRST ANNUAL
ROUND TABLE CONFERENCEON MATTERS PERTAINING TO RACING
GIDEON PUTNAM HOTEL & CONFERENCE CENTER
SARATOGA SPRINGS, NEW YORK
SUNDAY, AUGUST 17, 2003
821 Corporate Drive Lexington, Kentucky 40503-2794Telephone: (859) 224-2700 • Fax: (859) 224-2710
40 East 52nd Street New York, New York 10022-5911Telephone: (212) 371-5970 • Fax: (212) 371-6123
www.jockeyclub.com
Copyright® 2003 The Jockey Club
FIFTY-FIRST ANNUAL ROUND TABLE CONFERENCE ON MATTERS PERTAINING TO RACING
HOSTED BY
THE JOCKEY CLUB
Welcome to Participants and Guests page 9
Ogden Mills Phipps, Chairman, The Jockey Club
Activities of The Jockey Club page 9
Dan Fick, Executive Vice President & Executive Director, The Jockey Club
NTRA Update page 12
Tim Smith, Commissioner & CEO, National Thoroughbred Racing Association
Racing Medication and Testing Consortium Update
Overview page 16D.G.Van Clief, Jr., Vice Chairman, NTRA & President, Breeders’ Cup Ltd.
Uniform Medication: A Regulatory Perspective page 18Lonny Powell, President, Association of Racing Commissioners International
Wagering Technology Working Group Report
Introduction page 20
Tim Smith, Commissioner & CEO, National Thoroughbred Racing Association
The Report: Summary of Findings and Recommendations page 22
Greg Avioli, Deputy Commissioner & COO, NTRA
The Players’ Perspective page 24
Jim Quinn, Handicapper/Author
A Regulator’s Perspective page 26
Roger Licht, Chairman, California Horse Racing Board
InCompass: The Working Model for a Centralized Database
Overview page 28
Alan Marzelli, President, The Jockey Club
Benefits of the InCompass Race Track Operations System page 31
David Haydon, President, InCompass
Response to Wagering Technology Working Group Report page 33
Rudolph W. Giuliani, Chairman & CEO, Giuliani Partners
Closing Remarks page 37
Ogden Mills Phipps, Chairman, The Jockey Club
AppendixThe Jockey Club & Related Organizations page 38
ADAM, DONALDOwner/Breeder
AHAC, ALANVice President, eSuccess Solutions, Inc.
ALBER, WARRENCorrespondent, Thoroughbred Times
ALEXANDER, HELEN C. Steward, The Jockey Club; Owner/Breeder
ASHER, JOECantor-Fitzgerald
AVIOLI, GREGORYDeputy Commissioner & COO, National Thoroughbred Racing Association
BACKER, WILLIAM M.Owner/Breeder;
BAILEY, JOERussell-Reynolds
BARCLAY, H. DOUGLASTrustee, New York Racing Association; Owner/Breeder
BARILLARO, LAURAVice President/Controller, The Jockey Club
BARR, JOHNSteward, The Jockey Club; Owner/Breeder
BASS, M/M PERRYOwner/Breeder
BASSETT, JAMES E. IIIMember, The Jockey Club; Retired Chairman, Keeneland Association
BEARSE, STACY V.Publisher, The Blood-Horse
BELLOCQ, REMIExecutive Director, National Horsemen’sBenevolent & Protective Association
BILINSKI, JERRYOwner/Breeder
BINGER, JAMES H.Member, The Jockey Club; Owner/Breeder
BISHOP, EDWARD A. Registrar, The Jockey Club
BISHOP, WILLIAM T. IIIAttorney, Stoll, Keenon & Park
BISZANTZ, GARYMember, The Jockey Club; Owner/Breeder
BLOCK, IRASenior Vice President & General Counsel, New York City Off-Track Betting Corporation
BOMZE, RICHARDPresident, New York Thoroughbred Horsemen’sAssociation; Owner/Breeder
BONNIE, EDWARD S.Member, The Jockey Club; Owner/Breeder
BONSAL, FRANKMember, The Jockey Club; Owner/Breeder
BOUTIN, LUCY YOUNGMember, The Jockey Club; Owner/Breeder
BOWEN, EDWARD L. President, Grayson-Jockey Club Research Foundation
BRADY, JAMES C.Secretary-Treasurer, The Jockey Club; Owner/Breeder
BRAMLAGE, DR. LARRYMember, The Jockey Club; Vice President, AmericanAssociation of Equine Practitioners; Rood & RiddleEquine Hospital
BRIDA, DENNISExecutive Director, New York Thoroughbred Breeders, Inc.
BULEY, CHERYLCommissioner, New York State Racing & Wagering Board
BURCH, ROBERTPresident, The Jockey Club Technology Services, Inc.
CAMPBELL, ALEXANDER JR.Member, The Jockey Club; Owner/Breeder
CAMPBELL, ANNEOwner/Breeder
CAMPBELL, W. COTHRANOwner/Breeder
CAPEHART, THOMASMember, The Jockey Club; Owner/Breeder
CASAREGOLA, TOMDirector of Audits & Investigations, New York StateRacing & Wagering Board
CHAMBLIN, KEITHSenior Vice President, Industry Relations & Marketing, National Thoroughbred Racing Association
CHAMBLIN, TONYFormer President, Association of Racing Commissioners International
CHAMPION, CHARLESChairman & CEO, Youbet.com
CHENERY, HELEN B.Member, The Jockey Club; Owner/Breeder
CHILLINGWORTH, SHERWOOD C. Member, The Jockey Club; Executive Vice President, Oak Tree Racing Association
CLAY, BLYTHEOwner/Breeder
CLAY, ROBERTMember, The Jockey Club; Owner/Breeder
COHEN, JACKEditor, SportsEye
COIL, JAMESVice President, Engineering, The Jockey ClubTechnology Services, Inc.
IN ATTENDANCE
4
CONNELLY, LEOFormer State Steward; University of Arizona Stewards’ School
CORBETT, M/M RICHARDOwner/Breeder
CORNACCHIA, JOSEPHTrustee, New York Racing Association; Owner/Breeder
CRIST, STEVENChairman & Publisher, Daily Racing Form
CURRAN, ROBERTVice President, Corporate Communications, The Jockey Club
CUSHNY, VANsteeplestakes.com
DEAN, DONPresident, Racetrack Chaplaincy of America
DeFRANCIS, JOSEPHPresident, Maryland Jockey Club
DISKIN, SEANAnalyst, Giuliani Partners
DIZNEY, DAVIDOwner/Breeder
DIZNEY, DONALDMember, The Jockey Club; Owner/Breeder
DIZNEY, IRENEOwner/Breeder
DONOFRIO, CARMINESteward, New York State Racing & Wagering Board
DORONIUK, ROMANCOO, Magna Entertainment Corp.
DUNCKER, C. STEVENMember, The Jockey Club; Trustee, New York RacingAssociation; Owner/Breeder
duPONT, ALLAIREMember, The Jockey Club; Owner/Breeder
ERTMANN, JOHNPresident & CEO, Equibase Company
EVANS, EDWARD P.Member, The Jockey Club; Owner/Breeder
EVANS, ROBERT S.Member, The Jockey Club; Owner/Breeder
FARISH, AMBASSADOR WILLIAM S. Vice-Chairman, The Jockey Club; Owner/Breeder
FARISH, WILLIAM S. JR.Member, The Jockey Club; Owner/Breeder
FARMER, TRACYOwner/Breeder
FICK, DANExecutive Vice President & Executive Director, The Jockey Club
FISS, ALBERTThe Jockeys’ Guild
FITZSIMONS, HUGH A. JR.Member, The Jockey Club; Owner/Breeder
FLYNN, ROBERTExecutive Director, New York Thoroughbred Horsemen’s Association
FOLEY, DAVID L.Executive Director, American Association of Equine Practitioners
FOREMAN, ALANChairman & CEO, Thoroughbred Horsemen’s Association
FORT, JOHNOwner/Breeder
FRIED, ALBERT, JR.Trustee, New York Racing Association; Owner/Breeder
GALLAGHER, JIMVice President of Regulatory Compliance,New York Racing Association
GERRY, MARTHA F. Member, The Jockey Club; Owner/Breeder
GERTMENIAN, DR. L. WAYNEMatrix Capital Associates, Inc.
GILMAN, DR. MANUELRetired Steward, The Jockey Club
GIULIANI, RUDOLPH W.Chairman & CEO, Giuliani Partners
GLUCKSON, JIMDirector of Event Communications, National Thoroughbred Racing Association
GOODMAN, ALINEOwner/Breeder
GOODMAN, JOHN K.Member, The Jockey Club
HALE, LEONARD C.Racing Consultant
HAMILTON, CARLChairman & CEO, The Jockey Club Information Systems, Inc.
HAMILTON, RICHARDCommunications Officer, National Museum of Racing
HAMILTON, WILLIAMOwner/Breeder
HAMMELL, PETERDirector, National Museum of Racing
HANCOCK, ARTHUR B. IIIMember, The Jockey Club; Owner/Breeder
HANCOCK, DELLSteward, The Jockey Club; Owner/Breeder
HANCOCK, RICHARDExecutive Director, Florida Thoroughbred Breeders & Owners Association
HANCOCK, STACIOwner/Breeder
HAYDON, DAVIDPresident, InCompass
HAYWARD, CHARLESPublisher, Daily Racing Form
5
HEGARTY, MATTTurf Writer, Daily Racing Form
HELLER, BILLTurf Writer, Thoroughbred Times
HENDERSHOT, PEGGYVice President, Corporate Communications,National Thoroughbred Racing Association
HESS, GEOFFREYDirector, Giuliani Partners
HESS, MIKEPresident, Giuliani Partners
HETTEL, BERNARDExecutive Director, Kentucky State Racing Commission
HETTINGER, JOHNMember, The Jockey Club; Owner/Breeder
HETTINGER, WILLIAMOwner/Breeder
HICKEY, JAMES J. JR.President, American Horse Council
HICKS, DAVIDSteward, New York Racing Association
HILL, DR. TEDRacing Steward, The Jockey Club
HINE, CAROLYNOwner/Breeder
HOBLOCK, MICHAEL J.Chairman, New York State Racing & Wagering Board
HOLDEN, CAROLOwner/Breeder
HOOPER, DAVIDExecutive Director, Texas Thoroughbred Association
HUMPHREY, G. WATTS JR.Steward, The Jockey Club; Owner/Breeder
HUMPHREY, SALLYOwner/Breeder
HUSHION, MICHAELTrainer
JACOBS, JOHNOwner/Breeder
JERKENS, ELISABETHOwner/Breeder
JOHNSEN, COREYGroup Vice President for Florida, Oklahoma & Texas,Magna Entertainment Corp.
JOHNSON, WILLIAM J.Publisher, Saratoga Summer Magazine
JONES, M/M RAYWeinstein, Jones & Associates; Owner/Breeder
JONES, RICHARD I.G.Member, The Jockey Club; Owner/Breeder
JONES, RUSSELL B. JR.Member, The Jockey Club; Owner/Breeder
KANE, MIKETurf Writer, Schenectady Gazette
KELLY, NANCYExecutive Director, The Jockey Club Foundation; VicePresident, Development, Grayson-Jockey Club Research Foundation
KELLY, PATTrainer
KENNEY, KELLYProduction Coordinator, The Jockey Club
KINSELLA, MARTINExecutive Director, New York State Thoroughbred Breeding & Development Fund
KIRCHNER, KENSenior Vice President, Product Development, NationalThoroughbred Racing Association
KOLIAS-BAKER, DR. CYNTHIAEquine Pharmacologist, University of California-Davis
LaBELLE, HON. LAWRENCE J.Retired Judge, Saratoga Springs
LAMARRA, TOMNews Editor, The Blood-Horse
LANSBERRY, REGCorrespondent, Thoroughbred Times
LAWRENCE, DR. ROBERTDirector, Equine Industry Program, University of Louisville
LENZ, DR. THOMASPresident, American Association of EquinePractitioners
LIAO, JAMES S.J.Executive Vice President, Finance & Administration, The Jockey Club
LICHT, ROGERChairman, California Horse Racing Board
LIEBAU, F. JACKMember, The Jockey Club; President, Santa Anita Park
LIEBMAN, BENNETTCoordinator, Racing & Wagering Law Program, AlbanyLaw School
MACMILLEN, WILLIAM C. JR.Member, The Jockey Club; Owner/Breeder
MAHONY, PATVice President of Mutuels, New York Racing Association
MANFUSO, ROBERTOwner/Breeder
MANSELL, FRANK L. Member, The Jockey Club; Owner/Breeder
MARZELLI, ALANPresident, The Jockey Club
McALPINE, JIMPresident, Magna Entertainment Corp.
McGAUGHEY, CLAUDE R. IIITrainer
McNAIR, ROBERT C.Board Member, National Thoroughbred Racing Association; Owner/Breeder
6
MERIWETHER, JOHNTrustee, New York Racing Association; Owner/Breeder
METZGER, DANPresident, Thoroughbred Owners and Breeders Association
MEYOCKS, TERENCEPresident, New York Racing Association
MILLER, LINDAOwner/Breeder
MOENS, VIRGINIAOwner/Breeder
MOONEY, JOHNPresident, Maryland-Virginia Racing Circuit, Inc.
MOSELEY, MRS. JAMES B.Chairman, Suffolk Downs
MUSSELMAN, EDPublisher & Editor, Indian Charlie
MUTO, MANABUJapan Racing Association
NADER, WILLIAMSenior Vice President, New York Racing Association
NEILSEN, JERRYChairman, New York Breeders Association
NICHOLSON, NICKPresident, Keeneland Association
O’CONNOR, JOHN M.B.Board Member, Grayson-Jockey Club ResearchFoundation; Owner/Breeder
O’DEA, DR. JOSEPHOwner/Breeder
O’FARRELL, J. MICHAEL JR.Member, The Jockey Club; Owner/Breeder
OREFFICE, JOANNOwner/Breeder
OREFFICE, PAULTrustee New York Racing Association, Owner/Breeder
OXLEY, JOHN C. Member, The Jockey Club; Owner/Breeder
PAULICK, RAYEditor-in-Chief, The Blood-Horse
PAYSON, VIRGINIA KRAFTOwner/Breeder
PETTER, STANLEY D. JR.Owner/Breeder
PHILLIPS, JOHN W. Member, The Jockey Club; Owner/Breeder
PHIPPS, ANDREAOwner/Breeder
PHIPPS, DAISYOwner/Breeder
PHIPPS, LILLYOwner/Breeder
PHIPPS, OGDEN MILLSChairman, The Jockey Club; Owner/Breeder
PIERCE, BROOKSPresident, Autotote Systems
POLK, DR. HIRAM C. JR.Member, The Jockey Club; Owner/Breeder
PONS, JOSHOwner/Breeder
POULSON, ANNEPast President, Virginia Thoroughbred Association
POULSON, RICHARDVirginia Thoroughbred Association
POWELL, LONNYPresident, Association of Racing CommissionersInternational
QUINN, JIMHandicapper/Author
REED, DOUGLASDirector, Race Track Industry Program, University of Arizona
REICHER, MICHAELPublisher, Sports Eye
RICHARDSON, DR. J. DAVIDMember, The Jockey Club; Owner/Breeder
RIDKER, NORMANPublisher, Thoroughbred Times
RIEGLE, CHRISTIANGeneral Manager, Finger Lakes Racing Association
ROBINSON, J. MACKMember, The Jockey Club; Owner/Breeder
ROTFELD, DOLPHTrustee, New York Racing Association; Owner/Breeder
RUFFRA, DAVIDExecutive Vice President, Sales & Marketing, InCompass
RUSH, CHARLOTTERussell-Reynolds
SAMS, DR. RICHARDRacing Chemist, The Ohio State University
SCHERF, CHRISTOPHERExecutive Vice President, Thoroughbred Racing Associations
SCHMITT, KARL F. JR.President, Churchill Downs Simulcast Network
SCHWARTZ, BARRY K.Member, The Jockey Club; Chairman, New York Racing Association; Owner/Breeder
SCHWARTZ, SHERYLOwner/Breeder
SHAGAN, MIKEConsultant
SHIELDS, JOSEPH V. JR.Member, The Jockey Club; Vice Chairman, New YorkRacing Association
SHIELDS, MAURYOwner/Breeder
SIEGEL, DAVIDPresident, TrackMaster
7
SIMON, MARKEditor, Thoroughbred Times
SMITH, TIMCommissioner & CEO, National Thoroughbred RacingAssociation
SNYDER, HARRY D.Commissioner, New York State Racing Commission
SOMMER, VIOLAMember, The Jockey Club; Owner/Breeder
SPADARO, JOSEPHDeputy Executive Director, New York State Breeding & Development Fund
STAHL, HANSConsultant
STEVENS, GENEEditor & Publisher, Post Time USA
STEVENSON, BARBARAStevenson & Associates Consultants
STEVENSON, DAVIDStevenson & Associates Consultants
TAYLOR, FERGUSONChief Administrative & Financial Officer, CorporateTreasurer, National Thoroughbred Racing Association
THARP, LORRAINEMember, New York State Racing Commission
THAYER, STELLAPresident & Treasurer, Tampa Bay Downs
TROTTER, TOMMYRacing Steward
TUTTLE, CHIPPartner, Conover Tuttle Advertising & Public Relations
VAN CLIEF, D.G. JR.Member, The Jockey Club; President, Breeders’ Cup Ltd.;Vice Chairman, National Thoroughbred Racing Association
VAN DEINSE, JENIFERAssistant Director of Development, Grayson-JockeyClub Research Foundation
VICKERY, CHARLES E. IIExecutive Director, National Association of Thoroughbred Owners
VON STADE, JOHNPresident, National Museum of Racing; Owner/Breeder
WAIT, CHARLES V.Trustee, New York Racing Association; President, Adirondack Trust
WARD, JOHN T., JR.President, Kentucky Thoroughbred Association;Trainer; Owner/Breeder
WATERMAN, DR. SCOTExecutive Director, Racing Medication & Testing Consortium
WEBER, CHARLOTTE C. Member, The Jockey Club; Owner/Breeder
WHITNEY, WHEELOCKMember, The Jockey Club; Whitney ManagementCompany
WILLIAMS, BENNETT BELLOwner, The Bell Group LLC; Owner/Breeder
WILSON, MARKPresident & CEO, Television Games Network
YAMAMOTO, OSAMUJapan Racing Association
YOUNG, WILLIAM T.Member, The Jockey Club; Owner/Breeder
ZEITLIN, HANKExecutive Vice President & COO, Equibase Company
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The Round Table transcript is produced and designed by The Jockey Club’sCommunications Department which can be reached at (212) 521-5326 or (859) 224-2714.
The complete transcription of the 2003 Round Table Conference as published in this bookis also accessible on the Internet where it may be downloaded in sections or in its entirety.
www.jockeyclub.com
9
Ogden Mills Phipps: Good morning ladies and gentle-men and welcome to our 51st annual Round TableConference. It’s a pleasure to be back at the GideonPutnam, the site of many of our conferences over thesepast 51 years.
One year ago we left this conference with a feeling ofoptimism after hearing encouraging reports in the areasof science, medication and Thoroughbred ownership aswell as an update on the NTRA’s wide range of initiatives.
That conference, however, was shattered 10 Sundayslater when it was discovered that the integrity of ourwagering system and, indeed, the integrity of our sport, was compromised in what came tobe known as the Breeders’ Cup Ultra Pick Six incident.
Today we’ll spend a good deal of our program reviewing the actions this industry tookin the aftermath of that event; examining what preventive safeguards are now in place; andlooking to future improvements in the areas of wagering technology and security. I hope itwill be an enlightening session for everybody.
Among those we will hear from is Rudolph Giuliani, the chairman and CEO of GiulianiPartners, who assisted the Wagering Technology Working Group with its report. It’s anhonor to have you here with us Mr. Mayor and we’re looking forward to hearing from youlater in the program.
We start off as we always do with a Report of the Activities of The Jockey Club, beingdelivered today by Dan Fick who joined our staff back in March after spending many yearsat the American Quarter Horse Association. Dan is now executive director and executivevice president of The Jockey Club. Dan…
ACTIVITIES OF THE JOCKEY CLUB
Dan Fick: Thank you, Mr. Chairman. Goodmorning.
Last year I represented the AQHA at the50th Round Table Conference. This year, I amhonored to be presenting the Activities ofThe Jockey Club as we begin the next 50years of Round Tables.
In doing so, I would like to cover threeitems: Thoroughbred foal crop statistics,strategic initiatives being undertaken by TheJockey Club family of companies and sever-al industry projects that The Jockey Club ishelping coordinate.
First, MRLS. The 2001 outbreak inKentucky caused early- and late-term foalabortions. The effect on Thoroughbred reg-istrations is now fairly definitive. To date,there have been 307 fewer registrations for2001 and 1,862 for 2002. While the impactsof MRLS have been significant, the finalnumbers are fully one-third less than whatwas projected during the peak of the out-break in 2001.
Additional good news is that we are esti-mating the 2004 foal crop to be 37,200, anincrease of 200 over this year and 1,600
WELCOME TO PARTICIPANTS AND GUESTS
Ogden Mills Phipps
over 2002. Although the effects of MRLS onthe 2002 foal crop will be with us for yearsto come, the upward trend in these foalcrops the past two years is an encouragingsign.
Turning to some highlights from thepast year, I’d like to share some of the keystrategic initiatives and innovations in tech-nology for each of our business units.Increasingly, for companies that conducttheir business electronically, their homepage is their gateway to the world.
With that in mind, we undertook a com-plete redesign of The Jockey Club web sites.Our initial focus was on jockeyclub.com.The redesign was undertaken with the intentof making the site more informative and eas-ier to understand and navigate.
Examples can be found on the homepage itself, where visitors will notice promi-nently placed links to each of our e-busi-nesses: Interactive RegistrationTM, wherebreeders can perform registration functionsonline; equineline.com, where industryprofessionals can manage their equineinvestments; and equibase.com, where rac-ing fans can get the information they wantabout Thoroughbred racing, all in a real-time environment.
For the Registry itself, we improved oursite with photos and instant access to themost important pages – naming, fees,rules…and, of course, InteractiveRegistrationTM. Here, both new and experi-enced users can easily find everything theyneed to know to register a Thoroughbredonline.
The Jockey Club Information Systems,through equineline.com, the company’sflagship product line, continues to provideinnovative, state-of-the-art technology serv-ices to a growing subscriber base of over14,000 industry professionals.
Always looking for ways to simplifybreeding farms’ record-keeping chores, thisyear, TJCIS has developed the HealthBookTM
– an application that allows farm managersto easily record veterinary and health proce-dures in the field with the simple tap of a penon a tablet computer. This eliminates theneed for vet tickets to be written, duplicatedonto teasing charts and re-entered forbilling.
The system interfaces with our popularFarm Management software, so informationis recorded one time, while also makingcomplete health and veterinary recordsinstantly available where they are neededmost, in the field.
While equineline serves the horsemen,Equibase serves the racetracks and their fanbase. equibase.com has become one of rac-ing’s most popular Internet sites, as evi-denced by the 400,000 fans that visitedequibase.com on the three Saturdays of thisyear’s Triple Crown, a 26 percent increaseover last year.
Last year at this forum, we introducedour latest enhancements to Virtual StableTM,Equibase’s e-mail information and notifica-tion service that provides workouts, entriesand results.
In one year, Virtual Stable’s subscriberbase has grown by 93 percent. That’s 80,000people who want to be notified about specif-ic contenders in upcoming races, or televi-sion scheduling for the industry’s premierraces.
Equibase has also been very active insupporting the NTRA Productions’ expandedtelevision coverage of Thoroughbred racingby sponsoring Race Horse Digest and theRoads to the Triple Crown and Breeders’Cup. Equibase is the Official supplier of rac-ing information to TVG. And, most recently,Equibase was the presenting sponsor for
10
“Seabiscuit, the Making of the Movie.” Hereare some clips from those promotions.
[VIDEO]
Moving on, The Jockey Club TechnologyServices was launched in November of 2001,as a wholly owned subsidiary to provideinfrastructure support services for the entireJockey Club family of companies. TheTechnology Services team also has served asconsultants for NTRA, AQHA, the DailyRacing Form and the Wagering IntegrityAlliance, providing software design, pro-gramming and network operations centerservices to its customers.
Our final business unit, InCompass, isthe subject of a presentation later this morn-ing.
The Jockey Club also serves the industrywith two very worthy and extremely essentialcharities.
Since 1985, The Jockey Club Foundationhas provided thousands of individuals andtheir families in the racing industry with over$10 million in financial aid for medicalassistance and living expenses.
At the same time, the Grayson-JockeyClub Research Foundation has also suppliedresearchers with more than $10 million toconduct nearly 200 equine research projectsat more than 30 universities, most recently$300,000 for MRLS research. To assist theGrayson-Jockey Club Research Foundation,Laura Hillenbrand graciously hosted thisPSA.
[VIDEO]
For further details on our companiesand Thoroughbred breeding and racing sta-tistics, I would draw your attention to TheJockey Club Fact Book in your folder.
You’ll also find a new publication,“Thoroughly Thoroughbred,” a joint projectof The Jockey Club, TOBA and NTRA,
designed to educate people expressing aninterest in our sport.
In addition to executing our own inter-nal business plans, members of The JockeyClub team work behind the scenes onnumerous industry-wide projects. Expandedreports on two, the Medication Consortiumand Wagering Integrity, follow in this forum.But I’d like to give you a brief overview oftwo others.
We have been working with The RacingCompact, RCI and NAPRA to develop a uni-form license application for all jurisdictions.Today, I am pleased to announce we nowhave a prototype, dubbed the UniversalLicense – one license for all states for allclassifications of licensees.
You’ll also be pleased to know we areworking to simplify the fingerprintingprocess through electronic scanning andsubmission of fingerprints to the FBI.Hopefully no more ink! Our goal is onelicense with payment of applicable state feesthat is accepted nationwide. I am confident,based on cooperation among the individualsinvolved, that we can achieve this goal.
11
Dan Fick
Finally, in close cooperation with theAmerican Horse Council, NTRA, TOBA andthe national HBPA, we have been working toorganize and expand the grassroots networkof Thoroughbred racing interests. The pur-pose is to provide information on key feder-al legislative and regulatory issues, andencourage individuals to contact Congressand the Administration to secure support ofour industry’s positions. You’ll see why this isimportant later on in the program.
Now, as we embark on the next 50 yearsof Round Table Conferences, The JockeyClub will continue to provide leadership,lend support and promote a unifiedapproach to issues that are critical to thefuture of our industry. And in keeping withRound Table traditions, the most importantof those issues – uniform medication rules,technology and wagering integrity – will beaddressed this morning.
Enjoy the program.
12
Tim Smith: Thank you Dinny.This is the sixth Round Table gathering
I’ve had the privilege to speak to and, as Ithink everybody would acknowledge, thingshaven’t always been quite as positive as theyare today.
I used to take criticism of the NTRApretty personally, and then I realized that theauthors of those letters, e-mails, articles andcartoons simply were passionate abouthorseracing and cared so much about itssuccess. In addition, of course, some werecompletely nuts! But I guess it’s being in thepresence of Rudy Giuliani that inspires thatkind of candor.
But in any case, I recently felt a little bet-ter when I read one of the “Letters to
Seabiscuit,” from a wonderful little bookpublished by a relative of Charles andMarcella Howard.
You’d think this would be a pretty posi-tive book but not necessarily. I won’t readthe whole letter I have in mind, but you’ll getthe drift: “Dear Sir: I do not approve of yourretirement of Seabiscuit, and I am only oneof many. He should not be sent into oblivionjust because he won that race at Santa Anita.Think about it…Sun Beau raced until hewas nine years old.”
So I took from that that passionate fansand critics are always with us and always willbe. And, whether it’s the 30’s or today, clear-ly we have plenty of challenges in this busi-ness and as you’ve heard from Dan, this
NTRA UPDATE
Ogden Mills Phipps: Thank you, Dan. The National Thoroughbred Racing Association was announced at this venue in August
of 1998. With Tim Smith at the helm, it has made immense progress in many areas and Ithink that over the past 12 months the NTRA has once again demonstrated the scope andimportance of its activities, whether it was dealing with the Pick Six incident…or market-ing and promotion efforts related to Funny Cide’s quest for the Triple Crown…or capital-izing on Seabiscuit’s phenomenal success.
For a brief update on NTRA activities, please welcome the Commissioner, Tim Smith.Tim…
morning’s program will shortly turn to someof those issues in absolutely the best tradi-tions of this important gathering.
But I get a good mission for a few min-utes. I think it would be appropriate to talkabout some of the positive things that havehappened since last year’s Round Table, andhow some of it came about.
A lot of this – and let’s be clear – is dueto plain good luck and the extraordinarycontributions of others, from the courageousand brilliant Laura Hillenbrand who gave usSeabiscuit, the book…or Gary Ross, whogave us Seabiscuit, the screenplay andfilm…or upstate New York who gave us thestory of the Sackatoga Six…or for that mat-ter Jade Hunter and Zodiac Miss, who gaveus the amazing Azeri.
It is also sometimes true, however, likeour high school coaches used to tell us, thatgood luck is where opportunity meets prepa-ration. And I would submit that our industry– based on considerable preparation – isnow better equipped to take advantage of itsopportunities than at any time in recentmemory, and I’ll try to back that up in thenext few minutes.
Going into 2003, interest inThoroughbred racing was moving steadilyupward, as measured by the ESPN SportsPoll. For the third year in a row, moreAmericans identified themselves as horserac-ing fans, this time passing NHL hockey inpopularity. Overtaking boxing is our nextgoal and I’m confident we’ll soon be in thetop ten most popular sports.
Television ratings, which grew sharplylast summer after War Emblem’s TripleCrown run, continued their climb this year.And look, for example, at the results ofaggressively promoting the April 12th day ofgreat racing we had this spring at Keeneland,Aqueduct and Oaklawn on ESPN, NBC, othermedia outlets, and with a $1 Million Mystery
Mutuel Voucher that day. Did this – or could this – happen on its
own? The simple answer is “no.” This additional exposure was due to the
investment The Jockey Club and other indus-try leaders made five years ago, first in theNTRA itself and then in things like NTRAProductions. That company – NTRAProductions – produced and sold both of theApril 12th shows.
The expanded TV, in turn, was support-ed by a growing list of national sponsorsrecruited by our national marketing team,with a significant boost from NTRAPurchasing…another building block that’sbeen added in the last couple of years. Theindustry’s support, by the way, of the grouppurchasing initiative has been absolutely ter-rific with NYRA leading the way as they do inso many other areas.
And, then, of course, along came thisyear’s Derby and the outpouring of nationalpublicity over those magical five weeks forFunny Cide and his merry band of average-guy owners; Jose Santos and his photogenicfamily; and Barclay Tagg, the latter-day TomSmith. Waiting in the wings, as if also script-
13
Tim Smith
14
ed by Hollywood, were Empire Maker, BobbyFrankel, Jerry Bailey, John Chandler andJuddmonte Farm, itching for arematch…convinced they had the besthorse.
Now, there are normally ratings andattendance increases for the Belmont Stakeswhen a Triple Crown is on the line. But thisyear, a quantum leap in interest…somethingdifferent, something else was going on. TheBelmont telecast not only beat every othersports telecast that weekend, but the 6 to 7p.m. segment of NBC’s coverage beat everyother television show – period – for theentire week, including prime time.
The ratings for the Triple Crown as awhole were equally remarkable versus othercomparable events like the NBA Finals, NHLStanley Cup Finals and golf’s four majors...and if Tom Durkin were here he’d sayhorseracing has put a nose in front.
In the days that followed, two major newsponsors were announced: Dodge andNextel. The “NTRA Summer Racing Tour” onCBS with its popular three-race format alsodid quite well. Racing partnership and syndi-cation groups, along with The Greatest Game,reported noticeably increased interestamong potential new Thoroughbred owners.Of course, in late July came the release of“Seabiscuit” to favorable reviews and strongbox office. Heightened interest in the Travershas produced plans for the first-ever ESPN“SportsCenter” to originate from a racetrack.
What else happened? And why? Here arejust a few more examples:
• By having our own television produc-tion company in place, we were able on thebrainstorm of a talented young producernamed Joan Ciampi, to create the hour-longdocumentary “The Making of Seabiscuit” thatDan mentioned was sponsored by Equibase.That documentary in the month of July aloneon ESPN ran 12 times and it’s still running.
• By having a co-op marketing programin place, the NTRA and its members wereable to execute a national in-theater programto educate movie goers about horseracingand how to attend live racing in their area.Keith Chamblin put that together withUniversal (Studios) and you can see theresults.
• By having strengthened the industry’slicensing and merchandising capabilitieswhich came about as a result of the NTRA-Breeders’ Cup combination, we were able toconvince Universal (Studios) to let us dotogether “Seabiscuit” official merchandise.Ten thousand items were sold in the first fewdays.
• By having experience and capabilitieswith Internet marketing, the NTRA’s onlineoffer of a chance at a free trip to theHollywood premier of “Seabiscuit” producedover 220,000 e-mail entries. And even betterin a way, when we asked those e-mailsenders, “Would you like more informationabout Thoroughbred racing?” over 60 per-cent answered “yes.” That in itself is a signif-icant boost to our marketing database.
I’d also like to preview, as Dan men-tioned, one non-marketing but very impor-tant topic. It’s not as glamorous as televisionor Hollywood, but it’s another illustration ofthe industry’s considerable investment start-ing to bear fruit. And I’m speaking of our leg-islative and political capabilities, particularlyin Washington, which also has shown goodprogress and results this year.
Since we’re going multi-media thismorning, let me show you better than I cansay a brief clip from a debate on the Housefloor, which illustrates the importance of hav-ing well-informed advocates in our Nation’sCapitol.
[VIDEO of Kentucky 5th District Congressman, Hal Rogers]
I’m happy to report that our position onthat legislation prevailed after that debate. Soat least according to the House version of thebill, legal wagering on horseracing continuesto be exempted from the otherwise broadfederal prohibitions proposed for onlinewagering.
The bill’s future is now pending in theSenate, and this is quite important to all of ussince account wagering revenue is the fastestgrowing part of Thoroughbred handle. TVG,for example, is now in more than 12 millionhomes and sends 14 cents of every dollarback to support live racing. And interestingly,most new accounts in this fast growing areaof account wagering are, we’re told, thoseusing personal computers rather than tele-phones.
To return to marketing, an importantpart of the NTRA’s co-op advertising recentlywon the prestigious Addy Award for the singlebest broadcast ad campaign in the country. Iknow this may be hard for some of you tobelieve so I’m going to repeat that. We wonthe award for the best broadcast ad campaignin the country. Remarkably, it was our radiocampaign, used extensively here in New Yorkby NYRA and around the country by othermembers, that was chosen over 60,000entries, and most of those were television ads.
The campaign uses simulated race callsto contrast the excitement of a day at the trackwith more hum-drum alternatives in everydaylife. Here’s one version called “Dinner Date”comparing our form of entertainment to thatsometimes less exciting experience.
[AUDIO]
To give equal time to that other littlemedium, here’s one from the music-based TVcampaign, this by a different creative shopunder the best-of-breed approach we useunder NTRA Creative Services.
[VIDEO]
So to sum up, all in all, it’s been quite arun for horseracing, and the NTRA, since wewere last together, and I would argue that thisprogress was based on the preparations andinvestment made by the industry over the lastseveral years. With new interest, new spon-sors, and new momentum for the Breeders’Cup, including the recent purse increases, nodoubt there’s new momentum and opportu-nity for horseracing.
This new opportunity, however, willalmost certainly mean new scrutiny, newaccountability, and new public attention toany real or perceived flaws in our game,including, quite obviously, any questions ofintegrity…the fairness and honesty of ourunique combination of athletic and wageringcompetition.
You’ll sense, perhaps, that we’re nowreturning – as promised – back to the indus-try’s challenges and tough issues. This, I real-ize, after I bravely agreed to tackle sensitivetopics like increased ratings, marketingawards and new sponsors. Seriously, beforeturning the podium over to the next speakerand the important topic of medication, let metake a crack at connecting the topics of mar-keting and integrity.
Everything we do, positively or negativelyin the eyes of the public, sends a marketingmessage of some kind. In fact, we know that“real events” – what we actually do and whowe really are – communicate and shape atti-tudes and consumer behavior more power-fully than any advertising or press releaseever can do.
So, in reality, the next topic – the indus-try’s, and now also the NTRA’s, mission toachieve uniform medication standards andenhanced testing – also is a marketing issueand also will affect our ability to continue tocompete and grow.
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Tim Smith: So I’m pleased, on that note, to introduce the President of the Breeders’ Cup,the Vice Chairman of the NTRA and now, in addition, the Chairman of the RacingMedication and Testing Consortium, D. G. Van Clief.
D. G. Van Clief, Jr.: Thank you Tim, andgood morning ladies and gentlemen.
When it comes to the integrity ofThoroughbred racing, two key issues arecurrently at the top of everyone’s list of con-cerns. One is the status of our wageringtechnology, a subject that comprises a goodpart of this morning’s proceedings. Theother is racehorse medication and the relat-ed issue of drug testing. I’m going to spendjust a few minutes to brief you about theindustry’s efforts in this latter area.
Over the years, a number of industryorganizations and individuals have attempt-ed to move our sport toward uniform med-ication rules. Those efforts failed for twobasic reasons: 1) they lacked broad-basedsupport from industry stakeholders and 2)they lacked common ground in the keyareas of science, policy and regulation.
As Dr. Scot Waterman outlined at thisconference last year, the industry hadachieved not only broad-based support forimproved drug testing through the efforts ofthe NTRA Drug Testing Task Force and theAAEP’s Racehorse Medication Summit, butthanks to the Drug Testing Task Force,dozens of industry groups agreed to partici-pate in a national, benchmark survey of test-ing methodologies.
The Task Force also developed theSupertest to gauge the effectiveness of drugtesting at the local level and to tell us notonly where we were in drug testing, but,more importantly, where we needed to go.
Along with the AAEP Medication
Summit, it also demonstrated that this indus-try was capable of building consensus ondrug-testing issues. And based on thoseefforts, the Racing Medication and TestingConsortium now includes all of the industry’skey stakeholders, including regulators, whohave joined together to achieve a uniformmedication policy.
The RMTC’s mission is twofold: 1)achieve uniform medication rules forhorseracing and 2) establish a research pro-gram to detect illegal drugs and therapeuticmedications in the racehorse. In simpleterms, the aim of the group is to develop fair,scientifically defensible rules that everyonecan play by, and to create the means to stopwould-be cheaters.
While not underestimating the chal-lenges ahead, I believe that we are in a betterposition than ever to succeed. TheConsortium has been constituted as a not-
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RACING MEDICATION AND TESTING CONSORTIUM UPDATE
D. G. Van Clief, Jr.
OVERVIEW
for-profit corporation and with the recentaddition of the HTA and USTA, we now have25 organizations represented around thetable. Significantly, the three major racingbreeds – Thoroughbreds, Standardbredsand Quarter Horses – are also involved.
For the first time in the history of thesport, we do have consensus on a number ofkey areas. The group has unanimouslyadopted policy wording regarding environ-mental contaminants, prohibited practicesand the use of furosemide, non-steroidalanti-inflammatories, clenbuterol and anti-ulcer medications.
Under the leadership of The JockeyClub’s recent past president, Hans Stahl, theConsortium has secured annual funding of$800,000 per year for the next three years,most of which will go toward drug researchprojects.
Next month, $500,000 in grants will bedisbursed to fund new tests for substanceswe believe are being used in racehorses butcan’t now detect – such as EPO – and to aidin the development of research data tobridge differences in scientific opinion thatcurrently prevent us from achieving com-plete unanimity in the adoption of rules.
The Consortium is scheduled to meet inLos Angeles on the 25th of next month[September] and the goal will be to com-plete Model Policy in all areas except forthose therapeutic medications that requirefurther research. We anticipate the deliveryof our uniform policy to regulators for theirevaluation immediately thereafter.
Within a few months, it will be within ourindustry’s grasp to move ahead with theimplementation of one set of rules governingthe use of race-day medication. We will thensee whether this industry truly is capable ofsetting aside its special interests and politicaldifferences to support uniform medicationpolicies and the development of criticalfunding for future research.
The decision of whether to adopt theseModel Policies will rest squarely in the handsof state racing commissions across the coun-try. They will want and they will need to see aunited front on this issue if they are going toadopt our recommendations and make whathas heretofore been unattainable a reality.That is, for the first time in our sport’s histo-ry, a level playing field in the area of race-horse medication.
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D.G. Van Clief, Jr.: Since the final step necessary to success must be taken by individualracing commissions, we thought it only appropriate to include a regulator’s point of viewthis morning. It is my pleasure to introduce an individual who has been an active mem-ber of the Consortium since its inception. Lonny Powell is President & CEO of theAssociation of Racing Commissioners International, as well as the Treasurer and a BoardMember of the Racing Medication and Testing Consortium.
Lonny…
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UNIFORM MEDICATION: A REGULATORY PERSPECTIVE
Lonny Powell: Thank you D. G. and goodmorning everyone.
The topic before us today may very wellbe one of the most important issues that wehave ever grappled with. The matters that weare addressing are really part of our sport’sbedrock.
When we talk about medication, we’retalking about the integrity and the fairness ofthe sporting competition and the outcome ofthe race, and the all-important wageringcomponents and the racing fan that are sointertwined with our sport.
Secondly, we’re talking about the safetyof the jockey and, in the case of harness rac-ing, the driver.
And last but not least, we’re talking aboutthe health and welfare of the equine ath-lete...the horse…we don’t hear that wordenough...the horse upon which our industryis founded.
D. G. has done his usual masterful job inframing the overall situation for you. Nowover the next few minutes, permit me tocrank down the microscope just a little bitmore and discuss the game plan – the futureobjectives in this all-important quest for uni-form medication policy – particularly from aregulatory slant.
The time has finally arrived to answer,“What are our future steps – where do we asan industry and where do the regulators gofrom here?”
Well, as you heard from D. G., theConsortium is meeting in September in LosAngeles and from that point we’re going topick up the pace even more. We look toDecember 10th of this year in Tucson, Arizonawhere we will be conducting a closed-doorbriefing and workshop for all regulators. Itwill be facilitated by Dr. Scot Waterman, ourenergetic and ever-committed executive
director of the Consortium.This forum will provide all regulators
with an opportunity to better understand andget their arms around our proposed consen-sus policy and understand the process andhistory behind it, as well as offer final inputand comment as we fine tune the ModelPolicy.
After a very brief review, we look to thefirst quarter of 2004 – just around the corner– where we will be turning over the finalConsortium consensus Model Policy docu-ment to the RCI/NAPRA Joint Model RulesCommittee for conversion of that languageinto more regulation-friendly rules format.
At the same time and in tandem, theConsortium will officially make our ModelPolicy accessible to the industry at large sothe stakeholders on the state level in particu-lar can begin preparing to promote, encour-age and urge its timely adoption.
You can anticipate during the end of the2nd quarter of 2004 our likely submission ofa Medication Model Rules “Turn-Key” pack-age if you will that will be given to all stateracing commissions for their adoption attheir earliest possible opportunity.
And the racing commissions can counton on-going support from the Consortiumteam. Individuals like Dr. Waterman andmyself have committed to make ourselvesavailable to you, the industry, and specifical-ly to the racing commissions in order toassist in expediting the timely adoption ofthese all-important Model Medication Rules.
Now all this being said, we the membersof the Consortium are realists and we knowthe manner, speed, timing and mechanics ofthe rule-making process can differ material-ly, substantially and dramatically from onestate to the next. That is not what’s important.That alone does not derail our mission.
In our eyes, it is not necessarily the routeof the journey that matters. It’s the fact thatwe all buy in, commit, make every effort andhave a willingness to the same all-importantdestination – that of uniform medicationrules across state lines.
No doubt we in this industry know thatthere will be hurdles to jump, obstacles to benavigated through or around, and, of course,the usual criticism and armchair quarter-backing from the sidelines to deflect. But Isubmit to you that we cannot and we will notlet these anticipated adversities and difficul-ties prevent this industry and yourConsortium from getting the job done – fromcompleting our critical mission.
Our quest will require compromise andgive and take on behalf of every state racingcommission…on behalf of every leadingchemist…on behalf of every prominent vet-erinarian…on behalf of every racing stake-holder. After all, in our eyes there are no per-fect rules and policies when it comes to med-ication on anybody’s books that aren’t capa-ble of being improved upon. And even moreimportantly, there are no rules on the booksthat are beyond reproach in the name ofachieving national – not local or regional –uniformity.
I do have a final thought…or better yetlet’s call it what it is…it’s a plea. Pleaseunderstand that in this quest and journey forgreater uniformity in medication there can beno simple “hand-off” or “passing of the
baton.” In football parlance, just because thetailback gets the ball doesn’t mean that thefullback and the offensive line stop blockingor the receivers don’t continue to run theirroutes or even get a downfield block them-selves.
To truly make significant progresstoward the all-important medication ruleuniformity it will take the continued andenthusiastic participation of all industrystakeholders, particularly the tracks and thehorsemen groups at the local level. Your con-stant, consistent and ongoing efforts in push-ing and encouraging and supporting yourrespective racing commissions and yourlocal industry for adoption of this all-impor-tant Consortium Model Policy Rules areabsolutely critical to the success of this mis-sion. Thank you.
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Lonny Powell
D. G. Van Clief, Jr.: Thank you Lonny and I think it would be appropriate to thank you,thank the ARCI, NAPRA and commissioners across the country in advance for thethoughtful and positive reception that we know this model policy is going to get whendelivered.
Now, as has been the custom at the last few years of this Conference, we’re going togo to the break with a video of 2003 highlights. I think you’ll find that in this videothere’s the odds-on favorite for race of the year. I hope you enjoy it.
INTERMISSION
Tim Smith: Thank you, Dinny.After the events of Breeders’ Cup
Championship Day last year, when a theft ofover $3 million was attempted by tamperingwith tote and account wagering systems, theindustry worked together to make severalimmediate changes and then, based onexpert analysis and advice, to plan addition-al security improvements. You will hearmore about those findings and recommen-dations during the time remaining thismorning.
First a quick story. These events havebeen repeatedly described as a “majorwake-up call” for the industry. Wake-upcalls are often necessary but not welcome orpleasant. So, here’s the story:
A father looks in on his sleeping son. It’sa peaceful scene, but there’s a problem.
“My son, you must arise,” said thefather. “You’ll be late for school.”
“Oh, father,” the son replied. “The bedis warm and comfortable and I don’t want togo to school.”
“Why not?” asked the father.
“Three reasons,” said the son. “First,school is boring. Second, the kids tease me.Third, I hate school.”
“Well, then,” said the father. “I’ll giveyou three reasons why you should go. First, itis your duty. Second, you are 45 years old.Third, you’re the Principal!” [Laughs]
That was borrowed from a Jesuit priestwho gave a series of terrific lectures on theimportance of waking up and confrontingthe real world.
Today’s real world of electronic wager-ing – now so important to the future of ourindustry and its 500,000 jobs – candidlyinvolves a mixed picture. The Report you willhear summarized shortly will conclude –accurately – that real improvements havebeen made to system security and that thereis no evidence that we could find of attempt-ed or actual fraud in connection with othermulti-leg wagers within the last year beyondthose incidents we already know about.
It’s highly unlikely, in fact, that the par-ticular events of October 26th could happentoday. Nor do we think there is any reasonfor our customers to stop playing with confi-
20
OVERVIEW
Ogden Mills Phipps: The value of having a “league office” was probably never more evi-dent than last fall when the NTRA took the initiative to create the Wagering IntegrityAlliance and then convened the Wagering Technology Working Group in the immediateaftermath of the Breeders’ Cup incident.
Shortly thereafter, task forces and committees focusing on technology, communica-tions and legal issues were also formed.
We all owe a debt of gratitude to the individuals and organizations that have diligentlyparticipated in those activities over the past 10 months.
In this part of today’s program, we’re going to hear about the findings and recom-mendations of the Working Group and we’re going to hear from some of the people whowere involved.
To start us off again, here’s Tim Smith.Tim…
WAGERING TECHNOLOGY WORKING GROUP REPORT
21
dence, any more than we should stop usingour VISA® cards because bad people some-times commit identity theft or criminal hack-ers can get into their IT systems.
However, those expecting a conclusionthat everything is now okay again – in effect,that we can sleep – will be some combinationof surprised and disappointed by theWorking Group report.
Speaking for my colleagues on thatpanel, we think that there is a lot more to do;that there is a long way to go to bring wager-ing security up to the standard of true “bestpractices;” and that, in this process, weshould realize that we are no different thanlots of other industries – really all otherindustries – engaging in electronic com-merce.
As you’ll hear, a variety of cultural andstructural changes are needed to bring ourindustry up to the same level of security stan-dards being adopted by many others. We’renow all in the information management anddata transmission business. All of our trans-actions – whether we’re talking about bank-ing or retail or health care or legal wageringon horseracing – are vulnerable to foul play,yet each must be as secure as possible.
An example of “cultural” change mightbe as simple as racetrack and tote companyexecutives making clear to everyone in theirorganizations how important security reallyis. Can there be any doubt of that afterOctober 26th, which – even though it wasn’tcomputer hacking per se and there wasquick detection and prosecution – the words“scandal” and “horseracing” and “Breeders’Cup” were combined in countless headlines,and for weeks?
An example of “structural” change issimply making wagering security someone’sfull-time responsibility or “day job.” You’llhear more about this aspect in the next fewminutes as well. We can’t realistically expecteach track, each state or each racing com-mission to separately invest in the necessarycyber-security expertise and resources. Evenif one state were available to fund all that,you’ll see in the report the issue is multi-state, and indeed multi-hub and multi-tote.So a national approach, just as with medica-tion standards, is the only real solution.
It’s sort of like Lonny said about medica-tion. I think we can all predict what the skep-tics will say. All the standard issues and hur-dles on this one will apply – funding, gover-nance, building consensus on the specificdetails – they normally do. This is the realworld. This is being awake. In this case, weare – very literally – interdependent.
Tim Smith
Tim Smith: With that theme in mind, I’d like to introduce the next speaker. Greg Avioli, whoserves as our deputy commissioner and chief operating officer, has really done double duty overthe last eight months and, in effect, has also served as staff director for the Wagering TechnologyWorking Group, coordinating the efforts of dozens of experts and industry members.
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THE REPORT: SUMMARY OF FINDINGS AND RECOMMENDATIONS
Greg Avioli: Within days after the attemptedbetting fraud in connection with last year’sBreeders’ Cup, the NTRA convened theWagering Technology Working Group – rep-resenting regulators, racetracks, industryorganizations and consumers – and began adetailed review of the industry’s wagering sys-tem security.
The review included a representativesample of other Pick Four and Pick Sixwagers in 2002 to determine whether similartypes of wagering fraud had occurred.
At the same time, NTRA and Breeders’Cup engaged in an extensive communicationseffort to address public perception that thewagering system could be manipulated.
With the formation of the WageringIntegrity Alliance, the NTRA secured financialsupport for the wagering system review andrelated communications, legal, legislativeand technical consulting projects. TheAlliance raised over $3 million.
Major Alliance supporters includedNTRA and Breeders’ Cup, the New YorkRacing Association, Magna EntertainmentCorporation, Churchill Downs Incorporated,The Jockey Club, TVG, Keeneland, Fasig-Tipton and the AQHA.
Additional supporters included race-tracks, horsemen’s associations, the AAEP,Daily Racing Form and Winnercomm.
For the wagering system assessment, theNTRA engaged Ernst & Young Technologyand Security Risk Services. E & Y’s roleincluded a detailed review of the tote system– the current security and potential securityrisks associated with the processing of pari-mutuel wagers. At the conclusion of theirmulti-month review, Ernst & Young provideddetailed recommendations to the WorkingGroup on ways to improve security within the
industry.The Working Group also engaged
Giuliani Partners to provide crisis manage-ment advice, counsel on crime and securityissues, ensure the confidentiality of the wagerreview process as well as help frame theWorking Group’s final report and recom-mendations.
The review covered each of the four totecompanies that currently handle all of thewagering in the United States. Those are:AmTote, Autotote, United Tote and Las VegasDissemination Company. The review includedon-site interviews, inspections of facilitiesand tote hubs, a review of relevant internaldocuments and security policies. The indus-try’s security procedures were then com-pared against a set of international standardsfor information security management that arenow generally accepted by security auditorsaround the world.
As I noted before, the Working Group’swork also included a review of the Pick Fourand Pick Six wagers in 2002. We focused onwagers with payoffs of over $10,000 onCalifornia and New York races. The total setof these races that met those standards were1,600 individual tickets. It’s been a very diffi-cult and time-consuming process to reviewall these tickets because they are locatedthroughout the world at various hubs. But todate, more than 1,100 of these tickets havebeen reviewed and, while several presentedquestions, none have involved additional,unexplained irregularities.
So upon completion of this nine-monthreview of the wagering system, the WorkingGroup developed three unanimous recom-mendations.
The first, as referenced by Tim Smith justnow, is to establish a National Office of
Wagering Security. A national office is ourbest means for detecting and responding topotential security threats across multiplejurisdictions or tote systems. The office forwagering security would also be responsiblefor conducting security audits; monitoring ofa central database of wagers to detect securi-ty threats in real time; and, perhaps mostimportantly, sharing information on a real-time basis throughout the industry on poten-tial or real security issues.
The second recommendation is to estab-lish minimum, uniform security standards. Inany networked system – be it banks, retailoutlets, or a simulcast network – all mem-bers are more vulnerable to attack throughthe “weakest link,” the partner with theweakest security. Adoption of minimum uni-form standards for both domestic and off-shore wagering entities will allow only “trust-ed users” to have access to the pari-mutuelsystem. Uniform guidelines also ensure astandardized response to security breaches,regardless of what company or jurisdictionthey occur in.
Our third and final recommendation is todevelop an industry action plan to facilitatean upgrade of the current wagering infra-structure. You heard Congressman Rogersmention that simulcasting now accounts forover 85 percent of the annual $15 billion inhandle…our industry is more reliant onelectronic commerce than ever before. Animproved technology infrastructure willallow the industry to continue to maximizethis e-commerce growth and support state-of-the-art cyber-security applications thatother businesses that rely on e-commercenow have in place.
The Working Group has established aspecific timeline to implement each of thesethree recommendations. By the second quar-
ter of next year we expect to have standardModel Rules in place for wagering security,which you’ll hear more about in just amoment.
We are currently developing detailedplans for the creation of the national office ofwagering security and will be presentingthese plans to the NTRA Board and the rest ofthe industry in the next few months. A pre-liminary search for the Director of this officeis now underway.
Planning for longer-term upgrades to thewagering infrastructure is expected to beginin early 2004.
In conclusion, the Wagering Group foundthat the current wagering system functionsdependably with important security safe-guards now in place. But we must remain vig-ilant and, like all other businesses reliant onelectronic-commerce, must continue tomake security a priority.
I would like to thank the members of theWorking Group as well as the many organi-zations and individuals who assisted with thetote and ticket reviews, who gave their timeand expertise to this process.
23
Greg Avioli
24
Greg Avioli: And now to give you the players’ perspective on the Working Group’s reportand recommendations is handicapper Jim Quinn, a Working Group member. Jim also hasrecently been named to the newly created position of NTRA Players’ Representative.
Jim Quinn: Thank you.Although the players’ immediate
response to the Ultra Pick Six fraud ofOctober 2002, can be characterized fairly asa combination of outrage and cynicism, theoutrage obvious, the cynicism rooted in anindifferent past, most players’ responses andattitudes began to change almost as swiftly asthe industry’s consolidated response to thescandal.
The shift occurred in part because thefraud had been detected and prevented...ingreater part because the industry’s efforts atreform would be consolidated and led at thenational level...and in greater part stillbecause the working group responsible forinvestigating the security gaps would includea players’ representative. This was unprece-dented, and so in itself rather startling to thetens of thousands of pari-mutuel customerswho expected only that their concerns, criti-
cisms, and views would go unsolicited anddisregarded.
So rather quickly expectations that wouldhave been pessimistic in the extreme insteadbecame, not exactly positive, but hopeful.
A decent indication that consumer confi-dence had been shaken, but far from shat-tered, became clear in the November focusgroups of players that were held atHollywood Park, Lone Star Park, andAqueduct. Of the roughly 40 selected playerrepresentatives that participated, only onetestified that he and his Pick Six betting syn-dicate had ceased wagering as a result of thescandal.
From the players’ perspective, the indus-try’s immediate response was a goodresponse, much better than they had expect-ed.
In regard to reform, what did the playerswant? Three things, primarily:
• One, the transmission of all wageringdata from the simulcast outlets and hubs tothe commingled pools should be state of theart, that is, as good as it gets.
• Two, as soon as possible, technologyupgrades must be implemented, so that thelate mergers of simulcast pools that cause thesuspicious drops in the odds for unaccept-ably lengthy intervals after the horses haveleft the starting gates, would be eliminated,or effectively mitigated.
• Three, the players demanded to know,what is the scope of the problem, or howlong has this been going on?
Jim Quinn
THE PLAYERS’ PERSPECTIVE
25
I might add that in this context of expec-tations and anticipated reforms, the playersare unsympathetic to arguments as to costsand complexities. They want the problemssolved regardless.
Speaking from my seat at the table, andon behalf of the players I have been entrust-ed to represent, I am pleased to report thatthe crisis-management phase of the scandalhas been managed and conducted in anexemplary way. In accord with a kind of firstprinciple, all the relevant information wascollected and distributed to the public. Therewas never a hint of a cover up.
Crisis management included the hiring ofoutside experts to conduct the technicalassessments, and additional outside expertsto provide an independent review, not only ofthe technical analyses, but also of theWagering Technology Working Group’s workin general. This too has been appropriateand exceptionally well done.
From the players’ perspective, a crucialaspect of the crisis was the launching of thesystematic ticket review of five-figure payoffsthat should indicate whether the Ultra PickSix fraud was an isolated event, or part of awider pattern of pari-mutuel corruption andfraud.
I have participated on the task force thatreviews the structure of the Pick Six, PickFour tickets. None of the tickets I have exam-ined have been identical to the bogus tickets;a few have been facsimiles…these wereflagged, tracked and investigated and ulti-mately cleared as were other tickets that
aroused suspicions. The fraud so far appearsto be isolated to Chris Harn and his collabo-rators. The ticket review continues.
In regard to the investigative phase of theindustry’s response, primarily the assessmentof the tote companies’ security systems, theplayers’ perspective can best be described aswait-and-see.
The current structure of the industry’swagering systems has given credence to the“weakest link” scenario; that is, the securityof our wagering systems can be regardedonly as strong as their weakest link, whichmay be a hub, or any remote wagering outlet,such as Joe’s Friendly Betting Tavern inWisconsin, or an off-shore bet shop on someCentral America island.
Recommendations numbers one and twoof the final report, i.e., the creation of aNational Office of Wagering Security and thedevelopment of uniform security standardsby the industry for all wagering serviceproviders, are intended to control for theuniverse these problems and gaps.
Recommendation number three urges anaction plan be developed to upgrade thetechnology infrastructure of the industry. Theupgrades would enhance the processing effi-ciency of the players’ wagers, such that thesignificant odds drops after the off-times willstop. Until that happens, players’ complaintswill grow louder, and the perception of chi-canery will persist.
In sum, from the players’ perspective, ajob well done until now, has to be done evenbetter going forward.
Jim Quinn: And now to give you a regulator’s perspective on this is Roger Licht, distin-guished chairman of the California Horse Racing Board.
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A REGULATOR’S PERSPECTIVE
Roger Licht: Thank you for the opportunityto participate in the 2003 Jockey Club RoundTable. I am honored to be a part of this leg-endary event and to speak on wageringintegrity from a regulator’s vantage.
Horseracing loves to use the pronoun“they.” It starts with “they” gave me the threehorse, “they” say the track is fast today,“they” saw the horse work at 4 a.m., “they”would never sell this horse, but...
And it continues with the cry from everyfaction that “they” need help to survive in anindustry that truly is the Sport of Kings.
It is time that the word “we” replaced theword “they”. Not that “we” should give outthe three horse, but that the industry mustwork together to resolve the many adversari-al issues that are pending and strive to bene-fit from the evolution of the game – evenwhen that evolution includes an attemptedwagering fraud of $3 million. Entities likeNTRA have enabled regulators to work withindustry participants to achieve this goal.
The first thing that we must do – notice Isaid “we” and not “they”– is to ensure thatthere is integrity in the business of racing andin the game of racing. The 2002 Pick Sixfraud was the catalyst for the industry to takea look at itself. What we realized is that thebad guys tend to be more advanced than thegood guys when it comes to technology. Wehave seen this with security invasions at suchicons as Yahoo! and the Pentagon. NTRA hasjust concluded its study of wagering integrityand, as a result, we have a guide to not onlyprotecting the business as it exists today, butalso to insuring that our eye is on the ball inthe future so that we are ahead of the badguys.
Greg has already outlined the WorkingGroup’s recommendations for you. Each one
addresses both a regulatory need and oppor-tunity. Certainly, there are some issues thatare best dealt with at the national level, espe-cially in the area of technology. A NationalOffice of Wagering Security will be a valuableally to regulators, especially when it comes tosharing information on security innovationsor possible widespread security threats to thepari-mutuel system.
We have also heard the term “weakestlink” and “trusted user” today. The nationalstandards that the Working Group proposesfor all participants in the wagering systemwill help regulators determine which iswhich. With clear standards in place, we can,for example, work to end the intrusion ofillegal, offshore bookmakers into our sport.
That process already has begun, with anumber of horsemen and tracks now requir-ing specific identities for all wagering outlets– domestic or international – that are wager-ing into our pools. In my own jurisdiction,Daily Racing Form was exemplary in follow-ing the request from the California HorseRacing Board to end the advertising of theseoffshore books in its publication. This was ata substantial loss of revenue to them. It is anexample of the industry (regulators and jour-nalists) working toward a common goal toprotect the system as a whole.
As a regulator and a passionate fan, I canalso endorse the recommendation toupgrade our wagering technology. In addi-tion to the obvious security benefits, it willhelp us overcome the perceptual issue thatwe face with respect to late odds changes.
Perception is often more important thanreality. The perception is that people are bet-ting after the commencement of a race.From what we have learned to date, that isnot reality, but unless we upgrade our tote
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systems, we’ll continue to have disgruntledhorseplayers who feel that the odds on thewinner – especially when we bet on him –are dropping after the commencement of arace. Let’s change that perception – as fastas we can.
Regulators can and must work togetherstate by state to provide a uniform set ofsecurity rules for the tote companies andpari-mutuel operators and ensure that thereis a level playing field on the front side as wellas the backside. As Lonny alluded to in hisremarks, there are Model Rules that governracing. These are the ideal vehicle for ensur-ing the integrity and security of the wageringsystem, both at our pari-mutuel facilities andat the tote companies that service our $15billion wagering industry.
The good news is that we’ve been at thisa long time already. There’s a process inplace and a knowledgeable group of industrystakeholders who can make this happen. Inits report, the Wagering Technology Working
Group published a timeline that calls forrevised Model Rules by the end of the year.We as regulators are ready to do what’s feasi-ble and necessary for the overall process ofimproving wagering security. The WorkingGroup has given us the roadmap. It’s up to usto follow it.
Roger Licht
CONCLUSION
Tim Smith: Thanks, Roger. As we transition to Alan Marzelli, tech-
nology and our special guest, I would justlike to close this portion by adding some“thank you’s” and a closing observation ortwo.
I’d like to thank everybody who partici-pated on the Working Group and its severalTask Forces...those that contributed to theWagering Integrity Alliance, which con-tributed the necessary funds to this process.Characteristically, it was The Jockey Club wholed the way in setting up the WageringIntegrity Alliance. Not only was it the firstfinancial contributor, but it added tremen-dous amounts of expertise and work on theproject as well.
I’d especially like to thank Roger Lichtfor traveling from California to give the regu-lator’s perspective and also Jim Quinn. Asyou heard, Jim has been the voice over thelast several months of maybe the most impor-tant actor in this whole drama of all: the cus-tomer, without whom we wouldn’t have asport or an industry or the related agribusi-ness or the horse farms or any of it.
Let me close my part by talking about thecustomer just a little bit. Two observationsabout our fans: First, as we grapple with whatsurely will be an ongoing set of policy ques-tions, budget questions…operational flow-ing from the Working Group’s Report. Wecould do a lot worse as a touchstone or lit-mus test for those decisions to ask ourselves,
“How is this going to affect the customer?What will he or she expect us to do with thesedecisions?”
Second, as you heard confirmed by Jim,many of our fans were very upset and con-cerned in the wake of October 26th. Theywere also remarkably patient and tolerant.
Whether in focus groups, or surveys, orjust personal encounters, the message wasconsistent: we don’t expect perfection; infact, we’re pretty sophisticated about thechallenges that you and other similar indus-
tries face.What we do expect, however, is for the
industry to face its security problems square-ly, to do something about them, to have aplan, to maximize deterrence and all alongthe way to tell us what is going on. In short,to treat us with candor and respect.
In other words, we want you to take secu-rity seriously, to keep trying, to stay awake tothe threats that obviously exist and face theworld as it really is.
Tim Smith: So for more of the real world as it really is, Alan Marzelli.
INCOMPASS: THE WORKING MODEL FOR A CENTRALIZED DATABASE
OVERVIEW
Alan Marzelli: Thank you Tim, and goodmorning ladies and gentlemen.
While some of the recommendations youhave just heard may seem ambitious, in fact,they are achievable. Some aspects of the cur-rent report involve suggested improvementsthat the industry has been moving toward forseveral years.
For example, three years ago, at the 48thannual Round Table, we heard the results ofIBM’s in-depth analysis of the industry’sinformation technology infrastructure.
At the time, IBM cited the lack of integra-tion between various data gathering, storageand dissemination activities that resulted inoverlap, duplication of effort and inability toleverage essential information for businessanalysis and database marketing activities.
Their blueprint for the future includedthe creation of a technology infrastructurethat would integrate all information that orig-inates at racetracks. You will remember theterm “virtual enterprise behavior” – that iswhat they called it – to create economies ofscale and operational efficiencies that woulddeliver benefits to the entire industry. Now in
fairness, IBM’s main focus at the time was onimproving operational efficiency, not securi-ty. However, as we have learned, technologyhas a role to play in each of these areas.
Although the IBM initiative did not moveforward as originally envisioned, The JockeyClub immediately set out to address one ofthe key recommendations from their study.
Working with its racetrack customers,InCompass, a subsidiary of The Jockey Club,
Alan Marzelli
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re-engineered its legacy stand-alone racingoffice systems into a suite of software appli-cations that reside in a secure central serverenvironment.
Drawing directly from The Jockey Cluband Equibase databases, these new applica-tions for the first time enable racing officesacross the country to access official pedigree
and racing information in real time. I am pleased to introduce the story of
InCompass and its Race Track OperationsSystem, truly the industry’s first workingmodel for the application of a centralizeddatabase methodology and the virtual enter-prise behavior that it promotes.
VIDEO SCRIPT
David Haydon (President, InCompass): Just likein any other business, access to timely andaccurate information is premium in theThoroughbred business as well. Rick Baedeker (President, Hollywood Park): TheInCompass system is really making a differ-ence.Ben Huffman (Racing Secretary, Keeneland):InCompass is, obviously, making life a lot easi-er in the racing office.David Ruffra (Executive Vice President, Sales &Marketing, InCompass): The data you’re operat-ing with is always current, always fresh, alwaysaccurate. Sam Shelton (Vice President, ProductDevelopment, InCompass): They know the data’scorrect because it’s been inside The JockeyClub. It’s been quality-controlled. It’s been cer-tified.Mike Weiss (General Manager, Beulah Park): Thisis the best thing for the industry. This is goingto be great. David Ruffra: What we’ve done is create a newgeneration of product.Announcer: InCompass…one of the newestmembers of The Jockey Club family of compa-nies. InCompass traces its roots to McKinnieSystems, which The Jockey Club acquired in1994. Using the concepts developed inMcKinnie’s legacy racing office and horsemen’sbookeeper software applications, InCompassdeveloped a new generation of racetrack soft-ware applications, featuring, for the first time,real-time access to a centralized database ofpedigree and racing information. The applica-tions were designed and developed throughout2002, and rolled out in 2003. Access to the
industry’s official databases enables the com-pany to provide an unprecedented array ofinformation-based services to racetracksthroughout North America.
InCompass is headquartered at The JockeyClub offices, in Lexington, Kentucky. That’s alsohome to Equibase, Thoroughbred racing’s offi-cial database of racing information…as wellas The Jockey Club Registry, which has main-tained accurate pedigree information for everyThoroughbred foaled in North America for morethan 100 years.
Easy and immediate access to the Equibaseand Registry databases provides substantialsynergies for InCompass customers.Ben Huffman: The new system, it can do somany things that the old system could not do. Sam Shelton: It just gives the racing secretaryand his crew the ability to access so much moredata than was available in previous years…allthe Registry information, all the past perform-ance information from Equibase. David Haydon: Certainly, the racing office andthe horsemen’s bookkeeper modules – again,the premier products that we offer – haveestablished a central database foundation forthe entire industry. David Ruffra: Having a centralized database isnot only centralized, but it’s dynamic. Everytime something is updated, every time some-thing changes, every one of our customers nowget that change, receive that information, onan instant type of basis. Every time they go totheir files, it’s current. Every time they look forsomething, it’s the latest. Announcer: InCompass is bringing new func-tionality and operating efficiencies to racing
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offices across North America…and it’s all sup-ported by state-of-the-art technology at TheJockey Club, featuring a secure central serverenvironment that incorporates comprehensivedisaster recovery services within racetrackmission critical systems. David Haydon: That’s another beauty of being inthe family of companies in The Jockey Club,utilizing the infrastructure that The JockeyClub has built.Sam Shelton: All backups, full redundancy, dis-aster recovery plans, and that’s a lot of thethings that the racetrack wasn’t able tooffer…but we’re able to provide that to theindustry here at The Jockey Club.David Ruffra: We are using the latest and besttechnology, taking advantage of the best toolsthat are on the market to build those technolo-gy programs and to apply those consistentlythroughout the marketplace. David Haydon: And we’re using what we thinkare the best practices in the industry, as far assecurity, with management of user ID’s andpasswords and management reports that allowthem to see exactly what activity is going on attheir system.Announcer: When a racetrack upgrades to aracing office or horsemen’s bookkeeper sys-tem, InCompass personnel are on site, ensur-ing a smooth transition. Sam Shelton: We’ll come in at least a weekahead of time…make sure all their equipmentis set up, make sure all their connectivity backto The Jockey Club is ready to go, all the infra-structure is ready, it’s been certified…we wantto go in there and not have the computer runyour life, but let the computer be a tool for youto run the racing office. Mike Weiss: Their customer service has beenfabulous. They have been right on it, and got-ten everything done for us. Ben Huffman: If there’s a problem, the staff at
InCompass is outstanding. They’ll work withyou, no matter what. They’ll call you backimmediately. David Ruffra: Having somebody tell you theright answer, all the time, is pretty helpful. AndI think that’s what we’re trying to do for ourcustomers.Announcer: There was a time when racingoffice technology…if you could call it technol-ogy…was rather primitive. What once tookhours, days, sometimes even weeks, is nowdone with a few simple mouse clicks…thanksto InCompass. Like its fellow members of TheJockey Club family of companies, InCompassstrives to serve the needs of the Thoroughbredracing industry…with a centralized databaseas a foundation, it stands poised and ready tohelp the industry meet its wide-ranging tech-nology-based information needs, now and inthe future. David Ruffra: We have an enormous amount ofexpertise in our office, and we took theirinput, and we shared that with the racetracks,and I think we’ve blended it together today tohave a product that is a collection of what ourtracks want…the customers built the product.I think we have just been their agents. Sam Shelton: There’s so much more that we cando. We’ve got a good base to start with with thesharing, with the infrastructure, and with thedata available to us. I think the sky’s the limit. David Ruffra: Putting together the underpin-nings of what’s going to happen tomorrow isthe first step. And we have taken that first stepvery slowly, with a very measured step for-ward…I think the framework, the architec-ture, the state-of-the-art approach towardstechnology will guide us along the way.Announcer: Now, ladies and gentlemen, todemonstrate just a few benefits of the system,please welcome the president of InCompass, Mr. David Haydon…
BENEFITS OF THE INCOMPASS RACE TRACK OPERATIONS SYSTEM
David Haydon: Good morning ladies andgentlemen.
In the racing industry, every decisionmade is influenced by pedigree and racinginformation. And nowhere is that informa-tion more critical than the racing office. As aRacing Secretary, imagine trying to keeptrack of thousands of horses – maidens, non-winners of two, $20,000 claimers that havenot won $10,000 twice in the last six months,allowance horses, colts, fillies, stakes hors-es…the list goes on and on and on.
The new InCompass Race TrackOperations system, or RTO, provides directand immediate access to the official pedigreeand racing databases from The Jockey Cluband Equibase and helps the racing office staffmanage the data associated with their horsepopulation. The central database helps rac-ing office personnel complete the most basicand the most complex tasks on a daily basis.
Let’s look at a couple of examples. In the past, horses were often gelded at
the racetrack without Gelding Reports beingsubmitted to The Jockey Club. Unfortunately,the result of this is that race day programs,particularly simulcast programs, frequentlyhave geldings listed incorrectly as colts.
Now, when these situations occur at aracetrack using the RTO system, a number ofelectronic processes occur. First, anapproved user can access a link to TheJockey Club’s Interactive RegistrationTM sys-tem and automatically submit a GeldingReport to the Registry. Or, once the entriesare closed and the race card is drawn, anelectronic report that contains the most com-plete gelding information can be submitted tothe Registry for processing. As the entry andovernight process continues, the RTO systemcan send email alerts to racetrack staff,Equibase and the Registry alerting them that
the horse has, in fact, been gelded. This process results in the horse being
officially recorded as a gelding in the officialpedigree database and ensures that the liveand simulcast programs will be publishedwith the correct gender code for the horse.
Another useful feature provided by theRTO system is its ability to determine whethera horse is eligible for a race that has agerestrictions and allowance conditions. Asentries are made into races that have restric-tions and/or conditions, the RTO systemautomatically checks the horses’ past per-formances to determine if the horse qualifiesfor entry.
As an example, if Wild and Wicked wasentered in a race for three year-olds and upwhich have not won two races in 2003, oncethe system determines that Wild and Wickedmeets the age conditions, it then checks hispast performances and immediately displaysa message that informs the clerk that Wildand Wicked is not eligible for this race.
The system also provides Wild andWicked’s race record and past performancesif the entry clerk wants to find out why he isnot eligible for this race. They can quicklysee that he has won three races in 2003, amaiden race at Keeneland, an allowance raceat Churchill and the Ohio Derby at
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David Haydon
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Alan Marzelli: InCompass and The Jockey Clubwish to thank the many racetrack executives,racing secretaries and their staffs who haveworked with us to develop and implement thisnew generation of products. We could not havedone it without them.
And although its story is still being written,we are confident that InCompass will soon jointhe Breeders’ Cup, Equibase and the NTRA asvibrant examples of what we can achieve whenthe industry moves forward together, with ashared vision and carefully thought out, proper-ly designed and well executed plans.
That is something to keep in mind as wemove forward to implement the recommenda-tions of the Wagering Technology Working
Group.The events of October 26th were referred to
earlier as a wake up call, and indeed they were.But they were also a call to action. The time hascome for the industry to apply true virtual enter-prise behavior using a centralized databasemethodology to racing’s entire technology infra-structure, including our wagering system.
It is an ambitious task, but as an industry weshould look to our success with the Breeders’Cup, Equibase, NTRA and I’m sure, shortly,InCompass, as validation of what can beachieved when we work together to improve theoverall condition of the sport.
In the end, racing’s fans deserve nothingless.
CONCLUSION
Thistledown and therefore is not eligible for thisrace.
Although the conditions for this race werefairly simple, the system also accurately checkseligibility for races that have more complex con-ditions, including this one: Four-year-olds and up which have not woneither $28,000 other than maiden, claiming,starter, or restricted at one mile or over on theturf in 2003 or which have never won fourraces other than maiden, claiming, starter orrestricted.
Our software engineers at The Jockey ClubTechnology Services loved figuring out how toautomate that one. Luckily a number of ourengineers also enjoy the handicapping aspect of
our sport. Features similar to the ones we just
reviewed are available throughout InCompass’new Race Track Operations system…and morewill be available in the future. Whether makingit easier for the racing office to correct the gen-der of a horse, confirming the eligibility of hors-es against race conditions or assigning accurateweight allowances, the InCompass centralizeddatabase system automates what used to be verytime consuming and manual tasks.
Our commercial launch across our installedbase of 70 racetracks in North America is wellunderway and the RTO system is receiving favor-able reviews. Here’s how a few racing industryexecutives see it.
Mike Weiss: Again, you’re taking data and consolidating it. So now, I don’t have to look to Equibase,I don’t have to look at The Jockey Club, you look at one place.Rick Baedeker: The InCompass system is really about providing the industry what it needs for specif-ic, unique tasks. For instance, in the racing office, up until the InCompass system, if the Secretarywanted PPs on a horse, it would take hours to get that information. Now, it’s accessible on demand.Mike Weiss: For a Racing Secretary to be able to hustle horses, and to be able to click on a horse andget his past performances, and click on his past performances and get his charts, and see the otherhorses that were in the race. I mean, everybody knows how field size is important to this industryright now. You know, to the wagering part of it. And it’s already been beneficial.Rick Baedeker: And this is an effective solution, provided by the industry, and it’s only going to get bet-ter.
Ogden Mills Phipps: Thank you, Alan and David.If ever there was a speaker who needed no introduction, it is Rudolph Giuliani.He has enjoyed immensely successful careers as the U.S. Attorney for the Southern
District of New York, as the Mayor of New York City and, most recently, as a much-sought-after consultant specializing in crisis management, security, financial management and pub-lic safety.
His background in all these areas made him, quite simply, the right man for the jobwhen the Wagering Integrity Alliance reached out to him and his firm last fall.
There was no need to “get his feet wet” when he accepted the assignment…he is an avidand longtime fan and he maintains that enthusiasm for our sport today.
We will long remember his bravery, his courage, his grace and his leadership when hehelped New York City, our nation and indeed the world through the nightmare of September11th and its aftermath….he is indeed “America’s Mayor.”
We are honored to have him here with us at the Round Table Conference today.Please welcome....Rudy Giuliani.
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Rudolph W. Giuliani: Thank you very, verymuch, Dinny.
I’m pleased to be here to discuss the rec-ommendations that have been made,although I must say all of this was studiedand developed before Thursday of last week[August 14, the day of the power outage inthe Eastern part of the country] and I wouldadd one more recommendation: have abackup generator. And Saratoga does [haveone] and it gives you a sense of how impor-tant that is, to try to anticipate every problem.
As Dinny mentioned, I am a long term fanof racing. I think it’s a great, great sport andit’s a great industry and I think the way youpreserve it and expand it as a sport is toimprove it as a business by incorporating thevery best business practices and also recog-nize the modern world that we all live in,which is a world of very much increasedaccountability.
That’s the approach and philosophy that Ibrought to New York City. When I becamemayor of New York City, it seemed to me thatthe City of New York needed to be run like anaccountable business so that standards were
understood by everyone, they were transpar-ent and they could be described to people.
By the time I left office, I had taken thingslike crime statistics, job statistics, cleanlinessrecords and performance of hospitals andput them on the Internet so people couldobserve them and look at them. It was notonly very valuable in getting people to assessgovernment, but it was very, very valuable indisciplining the way in which we acted. Oncethere’s public scrutiny, there’s much betterperformance.
Rudolph W. Giuliani
RESPONSE TO WAGERING TECHNOLOGY WORKING GROUP REPORT
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And isn’t that really the key to what hap-pened to American business over the last twoyears? There was either a lost sense – or anever-developed sense – in certain business-es, certainly not all, but in a few, of theresponsibility to the public in running a pub-lic company or to the investors.
The way in which the racing industry, theNTRA, all of you, all of its constituent opera-tions, reacted to this incident on October 26th
of last year is actually a model of crisis man-agement. And I think it can be added to theones that I often study, lecture on, counselabout, give advice about [where we] try tocreate structures so that it is handled cor-rectly.
You did all of the right things in much thesame way as some of the most legendary cri-sis management best-practices experienceslike Johnson & Johnson’s handling of Tylenolor the way in which the state of Pennsylvaniaand Gov. Thornburgh handled Three MileIsland. Or the way in which the city, the stateand the federal government handled
September 11th and the aftermath of that.The key to it is confronting the problem
and confronting it realistically. And you didthat from the very beginning. Instead of threedifferent reports and five denials and creatingan atmosphere of cover-up – which is prob-ably the most common mistake made in deal-ing with a crisis – you can think of whetherit’s government crisis or business crisis, mostoften the cover-up is worse than the incidentitself.
The incident can always be dealt with.People, whether they’re racing fans orinvestors in business, are realistic. Theyknow you can’t have perfection. What theyexpect when something goes wrong, like thismanipulation of the wagering system, is thatyou’re going to confront it realistically andhonestly and deal with it and do exactly whatyou’ve achieved, which is to take somethingbad and to use it to accomplish somethinggood and actually to use it as a focus ofreform in the industry.
And you did that immediately, setting upthe working group so that you were able tofocus on the things that had to be doneimmediately and had to be done long term,putting in stop-gap measures immediately sothat people had confidence that they couldcontinue wagering while the whole long termwas being addressed by recording wagers,putting in systems so we could check onwagers right away so people could continueto be active in the sport while you studied thewhole thing.
Creating a working group that broadlyspanned all of the interest groups that areinvolved in dealing with the racing industryand also conducting a review of the last year’swagering to honestly answer the question:were these isolated incidents of people thatwere able to fool the system or was this a sys-temic problem that affected many, many
35
transactions? And, if it had been the case thatit had been systemic, then that would havebeen addressed.
And you brought in Ernst & Young andmy company, Giuliani Partners, to help assistin that [and] oversee it. And what we’vedetermined now, having gone through 70percent of the activities, is that this is isolatedconduct but not unusual conduct.
It might be unusual to the [racing] indus-try because this hasn’t happened before, butthis is really not anything peculiar to the rac-ing business or the racing industry: this iswhat’s going on in America today with elec-tronic commerce and, in many cases, on amuch, much larger scale than you’veencountered.
This is the price that we pay for havingthe quick transactions, the incredible speedwith which the transactions take place and,in your industry, a multitude of transactionsthat have to be resolved in less than secondsand then people who are trying very, veryhard to fool that system.
It’s become such a major issue, IT secu-rity, that we’re establishing – with Ernst &Young – and if you want to come and visit thisin September or October, I’d be more thanhappy to take you on a tour of it…we actual-ly are setting up a special unit that hacks,legally [and] officially that will take a systemthat your company or the government hasdeveloped and it will find a way into it. And ifit can find a way into it, then you can figureout how to plug that up.
Without mentioning any names, they’vealready closed down the turnstiles of one ofthe great amusement parks in the UnitedStates from 3,000 miles away, which thenfocused on the problem and the gap thatexisted in that system which you then canclose.
It’s astonishing that you have to do this
now but that’s just the reality of what youhave to do when business is transacted, wheninformation is disseminated. In many cases,the stakes are even a lot higher than whatwe’re dealing with here because it involvesnational security, protecting intelligenceinformation.
I really commend the industry, the NTRA,The Jockey Club, all of the constituent agen-cies that you saw here for really giving amodel on how you face up to this: deal withthe problem realistically and then come upwith recommendations that attempt, as bestyou can, to solve it. And do not pretend youcan ever solve it 100 percent.
You’re never going to be able to create asystem that’s so foolproof that somebody isn’tgoing to figure out a way to get through it. Butwhat the public expects of you, what yourcustomers expect, what the public expects,even what the government regulators expect,is state-of-the-art security that does the very,very best that it can to make sure that there isintegrity.
And, of course, the added importance tothis industry is that integrity is at the core ofwhy people bet. No one bets on wrestling;people bet on boxing so you don’t have tohave too high a standard [laughs]…soyou’re doing a lot better than that. And thereality is that you’ve actually in a very, verystrange way – and please don’t misunder-stand this, certainly not in terms of the trans-action that took place – you actually werebenefited by what happened here becausenot only could it have been a wake-up call; itwas.
And you made a lot of changes, bothimmediate – which I’ve described – and nowlong-term ones.
The idea of a wagering security office isvery, very important. The only way in whichyou can assure yourselves and assure the
36
public that there’s a standard of integrity nec-essary for people to continue to invest in thissport in all different ways is to centralize thedata and to have an office that focuses onaccomplishing that mission and then makingcertain with tests along the way that integrityis maintained.
I’ve analogized throughout this that whatyou’ve got to accomplish essentially what theNew York Stock Exchange, what the StockWatch program in which they monitor trans-actions looking for the possibilities of illegaltransactions, multiple transactions that takeplace very quickly, unusual ones, unusualvolume. Ninety to 99 percent of those that getflagged turn out to be perfectly legitimate.
But every once in a while, that’s the waythey discover a manipulation scheme or aninsider trading scheme from the standardsthat are set up and the computer technologythat studies it.
Another analogy is [when] the City ofNew York established five, six years ago asyndromic surveillance system in which wemeasure the number of cases reported tohospital emergency rooms, doctors andthrough pharmacy data so that we can pickup the early warning signs of a terroristattack, of a biological or chemical attack.
That proved to be the method by whichwe found West Nile Virus three years ago andit’s the method that was used September 11th
and the days after that to determine that wedidn’t have a major anthrax attack. And I’msure it’s the one that was utilized last week todetermine whether or not the blackout wassome part of a coordinated attack that wouldthen result in chemical or biologicalweapons then being used.
But these things are necessary on all dif-ferent levels so you shouldn’t feel unusualthat you have to do it.
The most important thing is to do it. Awagering office that looks to security can set
up those standards and then exist to monitorthem over a period of time. It just doesn’thelp to set up a system. This is a system thathas to be consistently monitored with stan-dards, which is the second recommendation,that there have to be minimum standards thatare accepted throughout the industry.
And then, finally, the technology has to bemodernized and kept state-of-the-art so thatthings are done faster, done more efficiently,things are done more effectively and thingsare done more accurately because that is notonly going to create really the ability to dis-cover a transaction like this as it is going onbut it’s going to expand the business andexpand the sport and make it more enjoyablefor people and bring in a lot more peoplewho will participate in it.
Ultimately, that’s the thing that I wouldlike to see happen. I think this is a really,really great sport. It has so many differentaspects to it that it is enormously attractive topeople and it needs to be promoted and itneeds to be focused on in the right way.
And I think that all of you have reallyaccomplished that over the last couple ofyears.
And in a way, as I said before, this inci-dent has turned out to be something that isbenefiting you in the way it is bringing you alltogether to maximize the benefit of the movieSeabiscuit or the exploits of Funny Cide orthe Travers, so you should continue in thatdirection.
This is an industry that like all others hasit frictions and its difficulties – New York Citynever had that [laughs] – but the reality isthe thing about this industry and New YorkCity that I see in common is when you facesomething really big, it brings you all togeth-er.
And then remember that that’s the way inwhich you’re really going to grow as anindustry in the future.
So I’d like to spend a little time taking your questions about this or anything else you wouldlike to ask me and then maybe make a concluding remark.
Thank you very much.
[No questions.]
Thank you very, very much and, again, congratulations to the NTRA, The Jockey Club and toevery one of the groups that participated in this because I really will use this in my next bookas a model of how to deal with a crisis and turn something that could have been catastrophicfor your industry into something that has actually allowed the industry to grow and create a pathfor future growth.
Thank you very much.
Ogden Mills Phipps: Thank you very much for your keen insights into our securityissues…and we also appreciate the hours you spent assisting us in the development of theWorking Group’s final report.
We have closed many of our conferences with a plea for industry cooperation, but I canthink of no time when it was more crucial than it is today.
If these past two hours and the topics we have covered prove anything, it’s that we havethe people, the programs, and the organizations in place to meet the challenges we faceand to steer our industry toward a long and prosperous future…if we continue to worktogether.
Thank you all for coming and we’ll look forward to seeing you here next year.
CLOSING REMARKS
51st Annual Round Table Conference • August 17, 2003
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THE JOCKEY CLUB& Related Organizations
For more than a century The Jockey Club has pursued its mission as an organization dedicat-ed to the improvement of Thoroughbred racing and breeding, earning recognition as anindustry leader through its competence and, in recent years, technological expertise.
www.jockeyclub.com
THE JOCKEY CLUB(tax-exempt non-stock membership corporation; governed by Board of Stewards)
THE JOCKEY CLUBTECHNOLOGY SERVICES, INC.
(wholly owned subsidiary)
THE JOCKEY CLUBRACING SERVICES, INC.
(wholly owned subsidiary)
THE JOCKEY CLUBHOLDDINGS, INC.
(wholly owned subsidiary)
EQUITY INVESTMENTS &AFFILIATED ORGANIZATIONS
(all tax exempt)
EQUIBASE COMPANY, LLC(general partnership)
TRACKMASTER(wholly owned subsidiary)
INCOMPASS SOLUTIONS, INC.
(wholly owned subsidiary)
THE JOCKEY CLUB INFORMATION SYSTEMS, INC.
(wholly owned subsidiary)
NTRA INVESTMENTS, LLC
THE JOCKEY CLUBFOUNDATION
GRAYSON-JOCKEY CLUBRESEARCH
FOUNDATION, INC.
MEMBERS OF THE JOCKEY CLUBJosephine E. Abercrombie* Helen C. AlexanderJoe L. AllbrittonJohn Ed AnthonyCharles Baker* John BarrJames E. Bassett IIIRollin BaughJohn A. Bell IIIReynolds Bell, Jr. James H. BingerGary BiszantzEdward S. BonnieFrank A. Bonsal, Jr.Lucy Boutin* James C. BradyNicholas F. BradyDr. Larry BramlageMichael C. ByrneAlexander G. Campbell, Jr.Thomas R. CapehartCharles J. CellaMrs. Alice H. ChandlerHelen B. CheneryGeorge M. ChestonSherwood C. ChillingworthRobert N. ClayF. Eugene Dixon, Jr.Donald R. DizneyAllan R. DragoneJack J. Dreyfus, Jr.Richard L. DuchossoisC. Steven DunckerAllaire duPont
William duPont IIIEdward P. EvansRobert S. Evans* William S. FarishWilliam S. Farish, Jr.Hugh A. Fitzsimons, Jr.Richard L. GelbMartha F. GerryJohn K. GoodmanLouis L. Haggin IIIArthur B. Hancock III* Dell HancockSeth W. HancockJoseph W. HarperJohn C. HarrisMarquess of Hartington CBEJohn HettingerE. Edward Houghton* G. Watts Humphrey, Jr.* Stuart S. Janney IIIRichard I. G. JonesRussell B. Jones, Jr.Peter F. KarchesDr. A. Gary LavinRobert B. LewisF. Jack LiebauWilliam C. MacMillen, Jr.Harry T. Mangurian, Jr.Frank L. MansellJ.W.Y. Martin, Jr.James K. McManusRobert E. MeyerhoffLeverett MillerMacKenzie Miller
Kenneth Noe Jr.Charles Nuckols, Jr.J. Michael O’Farrell, Jr.John C. OxleyJohn H. PeaceJohn W. Phillips* Ogden Mills PhippsDr. Hiram C. Polk, Jr.Carl PollardDavid P. ReynoldsReuben F. RichardsDr. J. David RichardsonDr. Jack K. RobbinsJ. Mack RobinsonTimothy H. SamsRichard Santulli* Peter G. SchiffBarry SchwartzJoseph V. Shields, Jr.Viola SommerRobert S. StraussGeorge Strawbridge, Jr.Dwight SutherlandShirley H. TaylorOakleigh B. ThorneDonald J. ValpredoDaniel G. Van Clief, Jr.Joseph Walker, Jr.Charlotte C. WeberWheelock WhitneyDavid WillmotMartin WygodWilliam T. Young
* Stewards
HONORARY MEMBERSRonald Arculli (Hong Kong)Dr. Jose Luis Caldani (South America)Shigeru Motai (Japan)Andrew Ramsden (Australia)
Raymond J. Rooney (Ireland)W.H. Rutledge (Australia)Julian Richmond-Watson (England)Masayuki Takahashi (Japan)
OFFICERSOgden Mills Phipps
Chairman
Alan MarzelliPresident
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William S. FarishVice Chairman
Dan FickExecutive Vice President &
Executive Director
James C. BradySecretary-Treasurer
James S.J. LiaoExecutive Vice President, Finance & Administration
